Proxy advisor Glass Lewis urges vote against Hyundai's overhaul plan

2018/05/15 17:02

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SEOUL, May 15 (Yonhap) -- Hyundai Motor Group's push for a corporate governance overhaul program is facing growing opposition as U.S. proxy advisor Glass Lewis has urged shareholders to vote against the move later this month.

In a recent report to investors, Glass Lewis said that Hyundai Motor Group's planned restructuring through spinoffs and mergers between affiliates carries "questionable business logic."

In March, the world's fifth-biggest automaking group announced that its auto parts supplier Hyundai Mobis Co., the group's de facto holding company, will spin off its domestic module and after-sales parts businesses and merge them with logistics affiliate Hyundai Glovis Co.

Glass Lewis took issue with the spinoff merger plan, arguing that the move is "profoundly unattractive for Mobis shareholders, yet more than reasonable for existing Glovis shareholders."

The proxy advisor expressed concerns that Hyundai's restructuring plan will be approved at shareholders' meetings both at Hyundai Mobis and Hyundai Glovis on May 29 if the National Pension Service fund, which is a major shareholder in the two firms, votes for it.

Glass Lewis has joined the opposition campaign against Hyundai's ownership restructuring plan, which has been led by U.S. hedge fund Elliott as well as domestic proxy advisor Sustinvest.

Under its long-term growth plan, Hyundai Mobis plans to focus on further beefing up its core auto parts operations and research and development (R&D) activities, as well as on developing future growth drivers like autonomous vehicles and connected cars after the spinoff and merger.

Last month, Korea Fair Trade Commission Chairman Kim Sang-jo cited Hyundai Motor's case as "the most desirable" one for local conglomerates that are required to restructure their circular cross-shareholding structures largely aimed at strengthening family control.

This file photo shows the Hyundai Mobis corporate logo atop its main office building in southern Seoul. (Yonhap)